FTC, VISA, BBB Condemn Bad Billing

[gonzo]

LOS ANGELES — Companies involved in fraudulent billing practices beware: the U.S. Federal Trade Commission (FTC), along with Visa and the Better Business Bureau are coming after you.

The FTC recently announced a new initiative in cooperation with Visa and the BBB "to alert consumers to online deceptive marketing connected to free trial offers that require individuals to cancel or opt-out of a recurring charge for future products or services."

Sound familiar? It should — it is the process by which most adult paysite memberships are sold today.

While the Commission is quick to point out that both free trial offers and recurring subscriptions are legitimate marketing methods, the growing abuse of these sales techniques is raising eyebrows. Director of the FTC's Bureau of Consumer Protection, David C. Vladeck, is particularly concerned about a free trial feature known as the "negative option."
According to the Commission, in a negative option feature, a company takes a consumer's failure to cancel a free trial offer as permission to begin charging for the service. While many merchants use this billing process appropriately, others pre-check consent boxes, bury the details of the offers in the fine print, terms and conditions, and make cancellations or returns difficult, catching consumers in a cycle of recurring charges for products and services they do not want.

"Free trial marketing can be convenient for consumers — if the terms are clearly spelled out beforehand," Vladeck said. "Legitimate marketers don't hide critical information about costs or cancellation policies to get their customers to agree to future charges."

Among the advice to consumers offered by FTC, Visa and BBB representatives is to read and understand all terms and conditions and to pay particular attention to any pre-checked boxes before you submit your payment card information for an order. They also advise that if the situation cannot be resolved with the merchant, then the card issuer should be contacted to dispute the charge.

For its part, Visa reports that it has terminated more than 100 scammers over the past six months for using bogus marketing techniques, such as hiding cancellation links, using pre-checked cross-sales with undisclosed terms, and other offenses, including using credit card information that was required "to pay for shipping and handling" for multiple additional, often recurring, charges.

"We've been monitoring this situation from this past summer in particular," Visa VP William M. Sheedy said. "Consumers are being fleeced."
"The game here is to get people hooked, keep them on the hook for monthly charges as long as you can, and only stop making those charges when you're forced to," BBB Online VP Stephen Salter said, adding "The product is irrelevant to getting the charges on the card."

http://www.xbiz.com/news/115753

[Toby]

No more bags of money washing up on the shore.

[gonzo]

Originally Posted by Toby

No more bags of money washing up on the shore.

SON!
How the MIGHTY have fallen.

[RawAlex]

I wonder what guys like Dee are thinking of this right now. I can't help but thinking they won't be having too many more $100 signup days.

[Hell Puppy]

I'm still not seeing them do anything truly aggressive to put a stop to it.

Unless you can squeeze it onto Entertainment Tonight or TMZ.com in between updates about who Tiger Woods is fucking, "informing the consumers" isn't going to do much.

[tony404]

Originally Posted by Hell Puppy

I'm still not seeing them do anything truly aggressive to put a stop to it.

Unless you can squeeze it onto Entertainment Tonight or TMZ.com in between updates about who Tiger Woods is fucking, "informing the consumers" isn't going to do much.

the sad truth my friend

[TheEnforcer]

A precursor to bigger and stronger actions to come?

[gonzo]

Originally Posted by TheEnforcer

A precursor to bigger and stronger actions to come?

Sure is a good time to thnk about selling VOD and webcams...

[RawAlex]

I actually think this is the FTC's shot across the bow.

I think they have spotted a problem which is too big for them to reign in just by enforcement alone, so they are making a very public announcement to give companies a chance to fall more in line with what they are doing, or to face the consequences. I also think they already have a couple of dozen good targets in their sights, and within a short period of time they will be knocking on doors and collecting evidence. I would not be shocked to see one or more adult companies get caught up in this.

There is a further issue here for some of the players who have moved their shell companies off shore but continue to operate their businesses from the US: Tax evasion. That is the hammer that comes with many FTC investigations, where even if they don't force on the original issue, they will give the IRS something to work with. It can get ugly. Some of the biggest pre-checked cross sellers in the porn business are operating in the US and trying to hide things offshore. They are a prime, juicy target.

[Toby]

Originally Posted by RawAlex

...I also think they already have a couple of dozen good targets in their sights, and within a short period of time they will be knocking on doors and collecting evidence. I would not be shocked to see one or more adult companies get caught up in this...

Generally speaking, by the time any Fed agency makes such an announcement they already have most everything they need to drop the hammer on anyone they have in their cross-hairs. Same can be said for VISA. It may just take awhile before any details are made public.

[Notime]

I have a feeling things will change.
Not sure why exactly. Just a feeling I have had a while.

All financial institutions are under more strickter government checking these days.
Creditcard companies too. Goverments need more money because of the bailouts and are looking under every rock they come across. Offshoring is getting difficult also with all new tax treaties.